The Strange Case Of The FBI’s Second Schaeffer Cox Informant

November 29, 2011 7:29 a.m.

Remember when Republican senate candidate Joe Miller hired a security team for that ill-fated campaign event at a public school last fall? Well, as it turns out, the head of the security team was moonlighting as a confidential informant infiltrating the Alaska militia movement for the FBI, in an effort that eventually helped lead to the arrest of Schaeffer Cox and his followers on weapons charges and an alleged plot to kill state officials.TPM has been reporting on members of the Alaska Peacemakers Militia — including leader Cox, married couple Lonnie and Karen Vernon, and Coleman Barney — who were arrested in March and charged with conspiring to kill Alaska State Troopers and other state officials. Though the state recently dropped the conspiracy charges, each still faces a number of federal weapons charges.

In an arraignment Monday, Cox, Lonnie Vernon and Barney pleaded not guilty to the weapons charges, which include possession of a grenade launcher. Cox said he was pleading not guilty as a “general assertion of actual innocence on all counts.”

Local media outlets in Alaska have for some time concluded that Bill Fulton, the head of the army surplus store and bail bonds agency Dropzone Security, was one of the two confidential informants for the FBI. And as TPM reported earlier this month, Cox himself named Fulton as the informant in his motion to dismiss the charges, claiming that Fulton was the one advocating for violent action against the government (more on that later). But in filings last week, the U.S. Attorney’s office named Fulton as one of the informants for the first time.

TPM readers may remember how in October of 2010, Alaska senatorial candidate Joe Miller hired Bill Fulton and two of his Dropzone Security employees to provide security for a town hall event in an Anchorage public school. Dropzone was an army surplus store that doubled as a fugitive apprehension agency, among other things.

At the event, Fulton and the others handcuffed and detained Alaska Dispatch journalist Tony Hopfinger for alleged trespassing and assault, after an altercation between Hopfinger and the security team. Hopfinger contended he was just trying to question and video Miller.

No charges were filed over the incident, but afterward it was reported that Fulton seemed to have ties to the Alaska Citizens Militia and was even known as the “supply Sergeant” on the group’s Google Forum.

Fulton would frequently post on the site under the username “bob bob,” but would sign his posts as “DropZone Bill.” In one post from January 2010, Fulton wrote: “I should hope that the militia is not involved with establishing any form of government moral or otherwise. It is the purpose of the militia to defend the people and the state. I believe our job is to be shooters, elected politicians get to deal with the government establishment portion of the pie.” In an October post he organized a meeting of militia members at his store.

After the Miller incident, Fulton denied that he was a member of the militia. He confirmed to TPM that he was a regular poster on the forum, though said it was for business purposes, and that his store has “a very small customer base,” so sometimes he has to drum up business. Occasionally, he said, he would post on the site to “stir ’em up when we’re having a slow month.”

But now it’s clear that it was more than just business. In the days following the March arrests of Cox and his cohorts, Fulton gave his attorney Wayne Anthony Ross power of attorney over his assets, including his store, and then seemingly disappeared. Ross then signed the store over to David Giles, which Giles rebranded as 907 Surplus.

“I don’t know and can’t say the extent of his involvement, if any, at this time, but he’s not a defendant,” Ross said in April. Giles told TPM then that he had not heard from Fulton, and had no idea where he was. Calls to Fulton’s home at the time went to a busy signal.

On March 14, three days after the arrests, posters on the Alaska Citizens Militia message board speculated about what happened to Fulton.

“Bill you ok?” David Luntz asked. “Chime in.”

“Last I heard, DZ was having problems with bad press,” poster Linton Daniels offered. “If I was in Anchorage, I would go by an check on him.”

Kath McCubbins-Carlson wondered: “Was he a plant all this time?”

At the time, Norm Olson, the founder of the ACM, was not sure what to think. “I really don’t know. I can only speculate,” he told TPM when asked about Fulton’s disappearance. “He’s gone, his business has been turned over to someone else, his house is empty…To quote the Warden in Shawshank Redemption: ‘. . .he up and vanished like a fart in the wind.'”

“There was an unnamed “confidential source” who testified at the Federal Grand Jury,” Olson added. “We’ll probably never know for sure just who it was, but Fulton’s disappearance does raise questions.”

Federal documents released earlier this year revealed that the FBI made the Cox arrests with the help of two informants on the federal payroll. In July, Gerald Olson was revealed to be CS-1 when his sentence for second-degree theft charges was reduced as a reward for his help in bringing about the arrests.

Fulton was named by Cox in a filing earlier this month that asked for a dismissal of the charges on First Amendment grounds. Cox claimed that Fulton “kept pushing and pushing the question ‘what my plan was’ and that his men were being mobilized to attack the government.”

“Fulton was extremely angry with me when I told him I had no plan to attack the government,” Cox said. “Fulton said that he had spent a lot of money to get his men ready for the war in Fairbanks.”

In a motion to join the motion for dismissal, Coleman Barney’s attorney Tim Dooley writes: “It would be useful if the government could point to any speech of Cox or Barney that was not protected first amendment speech. But the government cannot do that.”

“The only persons advocating for killing anyone were the confidential informants for the government,” Dooley added. “The only persons advocating a ‘war’ were the confidential informants for the government.”

The U.S. Attorney’s office filed a response to this motion last week. “The First Amendment’s protections do not extend to investigations of individuals and their speech concerning possession of silencers, hand grenades, conspiring to possess same,” the response says. “Nor is it protective of possessing a fully automatic machine gun or of a co-conspirators statements and acts in plotting to murder a federal district court judge and his family members.”

The filing goes on to describe how by May 2010, the FBI had the two confidential informants placed within Cox’s circle. Olson was giving the FBI information about Cox’s actions against the state, including an account of a December, 2010 “common law court” held by Cox in the backroom of a Denny’s, that “acquitted” Cox of spousal abuse charges and a weapons charge.

In early February 2011, court documents allege, Cox told Vernon and Olson to go to Anchorage to attend a militia convention and acquire C-4 explosives and as many pineapple hand grenades as possible. On around February 5, Vernon allegedly contacted Fulton about getting the grenades, and he and Olson met with Fulton at the convention. Neither Fulton nor Olson knew that the other was working for the FBI at the time, according to court documents.

In another conversation, Olson and Barney allegedly discussed acquiring gun silencers from Fulton: “Olson said Vernon had ordered a silencer, but that Vernon didn’t trust Fulton. During a conversation about the reliability of Fulton, Olson said to Barney and Cox that he would take it (the suppressor) if Vernon wouldn’t. Cox then replied that he (Olson) would not get stuck with a silencer as they are easy to move and are in high demand.”

The U.S. Attorney expressed disbelief in the filing at Cox’s claim that Fulton was the one planning an attack on the government on Cox’s behalf: “A military-surplus store owner was going to lead an attack against the government because of Cox’s problems with Children’s Services. Does this claim make any sense at all?”

Joe Miller spokesman Bill Peck told TPM that Miller had no knowledge of Fulton’s role with the FBI. “The only time Fulton’s security team was asked by the campaign to work an event was the Anchorage townhall in October of 2010,” Peck said. “Joe actually wasn’t involved with that decision. A campaign staff member organized the townhall and asked Fulton’s team to come.”

Miller himself has been drawn into the Schaeffer Cox story independently of Fulton, after Justin Elliott of Salon wrote about a conversation he had with Cox last September. Elliott quoted Cox as saying at the time: “I know Joe Miller pretty well. It’s a small state. I’ve known him, I know his kids,” he said, adding: “He’s a good guy and we’re buddies.”

Miller distanced himself from Cox in a statement at the time, saying he “became acquainted with Mr. Cox through Republican Party politics, not unlike many other State leaders. Mr. Cox offered no tangible support to Miller’s run for the US Senate; he was neither a campaign contributor nor volunteer; and, save for public forums during the campaign, has had no contact with Mr. Miller subsequent to his run-ins with the law early last year.”

When asked about the revelations about Fulton, Norm Olson, the founder of the Alaska Citizens Militia, this time told TPM he had been suspicious of him the whole time:

Although some seemed to be dazzled by Fulton’s ability to move inside the militia, I was suspicious of his generosity. I suppose he was disappointed with me since I drove away from his place of business with truckloads of equipment but never “played the game.” The ancient warning about “Greeks bearing gifts” is still good advice today. Sometimes things are just too good to be true. Whenever I’ve been offered large sums of money, I demand that it be given anonymously. When it comes to equipment, I always want to find out what’s in the boxes. In this business, one cannot be too careful.

“No, Bill Fulton was no surprise,” Olson told TPM. “The surprise I acknowledge is how blind various small groups of militia can be to the more-than-obvious attempts by the federals to entrap them. I wish they’d call me before letting the Trojan Horse inside the walls.”

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